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For self-employed individuals, contractors, and anyone using their personal vehicle for business, the IRS mileage rate is a critical figure. Each year, the IRS sets a new standard mileage rate that affects deductible expenses and tax savings. So, what can we expect for the IRS mileage rate in 2025? In this guide, we’ll share our predictions, a likely release date, the factors influencing the rate, and tips for maximizing your mileage deductions.
While the IRS hasn’t released the official mileage rates for 2025 yet, we can make educated predictions based on recent trends for business, medical, and charity mileage rates and the data we see here at Everlance.
For 2024, the IRS set the rates at 67 cents per mile for business, 22 cents for medical purposes, and 14 cents for charity-related driving. Here’s our prediction for 2025:
The IRS business mileage rate is likely to increase slightly to 68-70 cents per mile, given recent inflation and fuel costs. The rising costs of vehicle maintenance and insurance may also contribute to this uptick.
For medical miles, which cover trips to doctors and other health-related travel, we may see a minor increase to 23 cents per mile. Rising healthcare-related travel costs and inflation are likely to be considered in the rate adjustment.
The charity mileage rate, which is set by law, has remained steady at 14 cents per mile for several years. We anticipate this rate will remain unchanged for 2025, as it’s not adjusted annually like business and medical rates.
Historically, the IRS announces the standard mileage rate for the coming year in December. For example:
Using this timeline, we expect the IRS will release the 2025 mileage rate in early December. Keep an eye on IRS announcements or our business mileage hub during this period to get the official rate for next year.
The IRS sets the standard mileage rate annually, considering a range of economic factors to determine the cost of operating a vehicle. Here’s what goes into calculating the rate:
Fuel Costs
Fuel prices are one of the most significant factors. When gas prices rise sharply, the IRS often increases the mileage rate to offset these costs for taxpayers.
Vehicle Maintenance
The cost of maintaining a vehicle also influences the rate. The IRS looks at average expenses for repairs, maintenance, and depreciation, which all affect the annual cost of vehicle operation.
Insurance and Registration Fees
Insurance premiums and registration costs vary annually and by state. These costs contribute to the IRS’s assessment of total vehicle ownership expenses.
General Inflation
Inflation impacts every aspect of vehicle operation, from fuel and tires to routine service costs. The IRS accounts for inflation to help ensure that the mileage rate remains aligned with real-world expenses.
The IRS uses data from a range of sources, including the Bureau of Labor Statistics and other transportation indexes, to create a rate that reflects the costs taxpayers face when using their personal vehicles for work. Remember, this rate aims to represent an average, so your individual costs may be higher or lower than the set rate for any given year.
The IRS mileage rate directly impacts how much individuals can deduct for business mileage on their taxes, which can lead to significant savings. Here’s a closer look at how different groups benefit from these deductions and why the mileage rate is essential for their financial planning:
Self-employed individuals, such as freelancers, consultants, and small business owners, rely on the IRS mileage rate to reduce their taxable income. By tracking and deducting their business miles, self-employed taxpayers can lower their overall tax burden, effectively turning their travel expenses into tax savings. For many self-employed professionals, every mile counts, and the IRS mileage rate provides an easy, standardized method for calculating deductions without needing to track every car-related expense.
Example: A freelance photographer who drives to multiple client locations throughout the year can use the IRS mileage rate to deduct a portion of their travel costs, maximizing their business deductions and keeping more of their earnings.
Independent contractors and gig workers, including rideshare and delivery drivers, depend heavily on the IRS mileage rate to maximize their tax savings. Since many of them use personal vehicles for work, they can end up driving significant distances. The mileage rate allows these workers to claim a substantial deduction, which can offset the high costs associated with fuel, vehicle maintenance, and depreciation.
Example: A DoorDash dasher who logs thousands of miles delivering food each year can use the IRS mileage rate to deduct a considerable portion of their vehicle expenses, reducing their taxable income and keeping more of their hard-earned money.
For employees who drive their own vehicles for work-related purposes, some companies offer mileage reimbursement based on the IRS mileage rate. By using this rate as a benchmark, employers can ensure fair compensation for their employees’ out-of-pocket travel expenses. In cases where companies don’t reimburse mileage, employees may be able to deduct these expenses on their taxes, depending on their tax situation.
Example: A sales representative who drives to client meetings can use their company’s reimbursement based on the IRS rate or potentially deduct unreimbursed business miles to recoup part of their expenses.
In addition to business mileage, mileage deductions also affects individuals who claim medical miles or charity miles. Although the rates for these purposes are typically lower than the business rate, they still allow taxpayers to recover some of the costs associated with these miles. Medical mileage, for instance, can be deducted if medical expenses exceed a certain percentage of the taxpayer’s income, while charitable mileage can be deducted for volunteer work.
Example: A volunteer driver for a nonprofit organization can use the charity mileage rate to deduct their transportation costs, making it easier to support charitable work without bearing all the expenses personally.
Small business owners who own company vehicles or manage small fleets can use the IRS mileage rate as an alternative to tracking actual expenses. For businesses with simple vehicle use, applying the standard mileage rate simplifies accounting and ensures consistent deductions. Additionally, small business owners can calculate employee reimbursement rates based on the IRS mileage rate, creating a fair and tax-compliant system for reimbursing work-related travel.
Example: A landscaping business owner can use the IRS mileage rate to estimate costs for employee travel between job sites, streamlining bookkeeping and aligning with IRS standards.
If you’re tracking miles for business, here are some steps to make the most of the IRS mileage rate:
Track Miles Accurately
Use a mileage tracking app like Everlance to log every business mile you drive. Apps provide accurate records and prevent missed deductions.
Save on Fuel Costs
Consider fuel-efficient driving habits, as lower fuel consumption can amplify your mileage deductions by reducing expenses overall.
Keep Maintenance Records
Document all vehicle expenses, such as oil changes, repairs, and insurance premiums. These records may not be directly deductible with the standard mileage rate but can be useful if you switch to the actual expense method.
The standard mileage rate is popular because it simplifies tax calculations. Instead of itemizing all car expenses, you simply multiply your total business miles by the IRS rate. This method often benefits self-employed individuals who drive frequently for work, as it eliminates the need to keep detailed receipts for fuel, maintenance, and insurance.
The actual expense method may be more beneficial for those with high vehicle costs but requires detailed record-keeping. Consulting with a tax advisor can help you determine which method maximizes your deductions, but for a rough estimate we've build a free standard mileage vs actual expenses calculator
Everlance offers automated mileage tracking and easy-to-use features that simplify tax preparation and help you capture every possible deduction. Here’s how Everlance supports your mileage deduction needs:
The average Everlance user saves $6,500 in tax deductions, which means more money in their pockets to spend on vacations, save for retirement, or pay down some of those pesky debts.
While the official IRS mileage rate for 2025 hasn’t been announced yet, staying informed on the expected rate and understanding how it’s determined can help you maximize your tax savings. With an expected release in December, we’ll know soon whether the rate will increase. Using tools like Everlance to track your mileage will ensure that every mile is documented, providing the best possible deduction for your business.
Brad Thibeau is the Head of Growth & Partnerships at Everlance. Brad has worked at Everlance since 2021 with a focus on helping self employed people save time and money on their taxes.
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